Multiple Listing Service in Real Estate

Learn the Meaning of MLS and How Agents Use It

a hand signing a contract with money and a model house in background
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A Multiple Listing Service, or MLS, is a marketing database set up by a group of cooperating real estate brokers. Its purpose is to provide accurate and structured data about properties for sale. It also is a mechanism for listing brokers to offer compensation to buyer brokers who bring a buyer for their listed property.

Each MLS has its own rules and procedures. If the membership is all realtors, then the rules are patterned on regulations published by the National Association of Realtors®. By using rigid data criteria and providing rules for the offer of compensation to other brokers, the MLS has been the primary vehicle for the vast majority of real estate transactions over the years.

MLS Associations

There isn't really an accurate count of MLS organizations, and they're constantly merging and breaking off. One source reports: "There are 1,400 local associations/boards which each govern their local MLS practices, and 54 state and territory associations of Realtors® that house the local boards. In Canada, there are 101 local associations and 11 state associations."

Brokers in a market area join an MLS in order to share homes for sale listing information with other brokers. It is very efficient, in that every broker wants as many other brokers as possible to see their listings and bring buyers who have an interest. The rules of the MLS specify that brokers indicate with each listing the percentage of the listing commission paid by the seller that they will share with another broker member who brings a successful buyer.

Accuracy of Information

MLS listings databases are considered the most accurate as far as property details on the Internet or elsewhere. This is due to rules that are strictly enforced, even fining members who do not adhere to the structure and content rules.

  • Timeliness - new listings must be entered within a specified length of time.  Fines are generated if a member doesn't enter the full listing data by the deadline. Generally, this is 24 to 48 hours after the listing agreement is signed.
  • Accuracy - from square footage to directions and location, the MLS association wants to maintain a high level of accuracy in information entered.
  • Photos - Quality and number of photos are often mandated as well, though this one can vary a bit.

Generally, the local MLS IDX, Internet Data Exchange feeds and search systems are considered the most accurate and up to date, better than the big sites like Zillow and others.

Complaints and Disputes

The MLS will normally mandate either mediation, arbitration or both for disputes among members. They also try to be the first destination for consumer complaints, as the next level is the state licensing board. Each local MLS also has an ethics committee to hear complaints from members about the ethics of others. The committee hears both sides of disputes and rules on the situation. Many problems have to do with commissions.

Procuring Cause - This is a concept that decides which real estate agent is the primary reason for the client's involvement in the transaction. In other words, and when it happens most often, who got this buyer to the point of contracting to buy this home?

The Internet aggravated this situation. People go to websites and search for home listings, and they may call or email the listing agent to get a question about the property answered. Later, if another agent brings this buyer because the worked with them in finding a home, the listing agent may say that their first contact made them the "procuring cause."

The ethics committee will look at the situation as a whole and in the context of who did what and when they did it. Generally, if answering a question about the property is all that happened with the listing agent, the buyer's agent will be entitled to the commission. The local MLS is a great tool for shared marketing of homes for sale.